Every once in awhile, you hear of an idea so blindingly obvious and inarguably wise that you wonder why in God’s name it’s still a notion and not a reality.

That happened to me this morning when I heard about the Taxpayer Receipt, the brainchild of the folks at Third Way.

In a brief and readable policy paper, David Kendall and Jim Kessler propose “providing each taxpayer with a receipt that shows them exactly how their money is spent to the penny.”  That’s it.

Here’s what the receipt would look like:


The goal is to keep Americans informed about where their tax money really goes and to force citizens to confront the hard choices we’ll have to make to do something about our staggering and endless budget deficits. It also offers an antidote to the budget blather on both the right (e.g. Republicans who claim they can balance the budget by snuffing out waste, fraud, and abuse without touching Social Security, Medicare, or defense) and on the left (e.g. Democrats who think that boosting taxes on a small slice of the population will do anything to raise the money needed to finance our spending.)

Okay, somebody give me one good reason why we’re not doing this.

(Note: In an earlier version of this post, I included the wrong receipt — one that misstated the amount of money going to national parks. Sorry for my mistake.)

47 Responses to “Idea of the day: A Taxpayer Receipt”

  1. Marcia Neel says:

    You’ve hit on it again, Dan! Thanks for sharing!!!!

  2. Paul D says:

    Good idea but given what we know about governments, how much will it cost to get this information in real time?

  3. Frank mihal says:

    This is such a good idea. It’s like the v8 commercial when they hit their head and say they could have had a v8!!! This should have been in the works for years already it’s so obvious! Lol

  4. Tim says:

    It’s a great idea. The reason we aren’t doing this: I don’t think our politicians have any interest in actually being held accountable. I would love to see this done, but good luck getting it put into law.

  5. greg k says:

    if only they would switch gears so that the arts would get the combat operations funding…

  6. Jim says:

    This is great! But in addition to this, the receipt should also show how much was borrowed (and has been borrowed) in the taxpayers name that year…and what that money went for! And, the amount of money that is there in the Social Security “trust fund” for me (which is $0, or an IOU from another part of the government).

    – Jim

  7. Steve-O says:

    Love it! But it’s way too practical and involves too much common sense to be viable in today’s political climate.

  8. Joe says:

    Now forward this on to your local politician and tell them you’ll vote for them to stay if they use this. Make it part of their pledge.

  9. Michael says:

    Brilliant. It puts many things into better perspective. I would add two columns to illustrate (1) each item’s percentage of your tax bill (essentially the same percentage as each category is of the Federal Budget), and (2) each item’s percentage of your earnings.

  10. Ted says:

    This would not solve anything. The descriptions themselves would be politicized, as they are in this example. Describing the EPA budget as environmental cleanup is pure spin. How much of the EPA budget is spent on actual cleanup?

    Similarly, turning the entire dept of education budget into simply fundingvfor low income students, while sounding altruistic, is far from accurate in terms of how money is actually spent.

    Trying to convert a multiple-trillion budget into line items only makes sense if you remove the spun descriptions and assign dollars generically to the departments.

    Overall though I think this is too simplistic, even if you remove the political spins in the descriptions.

  11. Fred says:

    This would be a great idea Daniel, but I do agree with Ted that the descriptions would be a battleground for spin.

  12. Laura says:

    Might be a little too transparent for government types.

  13. Leslie says:

    This is a great idea! From a taxpayer perspective, it makes the government accountable to each of us, and seeing the line items serves to connect us to all the reasons we pay taxes.

  14. Alan Wolf says:

    If you are going rehash someone else’s idea, copy their figure, too, not the one that is easier copy that has been truthified. The figure from Third Way lists the National Parks as costing the example taxpayer $4.27, the place you took figure from modified their figure so National Parks are listed as costing the $69. I do not know why the people from whom you copied the figured made that modification, but it is wrong.

  15. Sirona Branson says:

    It wouldn’t be hard to have a irs.gov/calc website where you can put in your own numbers and have it be calculated out.

  16. Trevor says:

    “(e.g. Democrats who think that boosting taxes on a small slice of the population will do anything to raise the money needed to finance our spending.)”

    You live in one of the most inequitable nations on earth, where the richest 400 people own as much as the bottom 150 million and wealth inequality is at its most extreme since 1928 – http://extremeinequality.org/ – and yet you are prepared to mock those who suggest the only viable solution to your crippling debt crisis. Remarkable.

    And how will a receipt that will only encourage people to look for further cuts to your already impoverished health and welfare systems possibly be a good thing?

    Rather than a receipt that by its very nature asks “what else can we cut?” you could look at Dan Ariely’s research on wealth inequality in your country and ask why your society allows a situation like this to continue that is clearly so detrimental to a viable democracy.

    http://danariely.com/2010/09/30/wealth-inequality/

  17. Dan Pink Dan Pink says:

    @alan — You’re right. I messed up. I replaced the erroneous receipt with the correct one. Thanks for flagging my mistake.

  18. Loren says:

    Here’s one possible reason we do not receive a receipt. Our government of the people and by the people is just like the people – who don’t know how to manage their personal finances; who, if they have a budget, fail to follow it; who live beyond their means with increasing debt. Quite frankly, our society does not value financial management, if it did, there would be required classes in middle and high schools throughout the country teaching people about budgeting, balancing a checkbook, saving, investing, loans, etc. The vast majority of people don’t care to be responsible, so the government simply reflects and abuses the indifference.

  19. Dan Pink Dan Pink says:

    @trevor —

    Thanks for the comment.

    You make a fair point about inequality. It’s a serious concern. And books like The Spirit Level (http://amzn.to/5xTUT9) make a convincing case that the problem with inequality ripples across all parts of society and impedes economic growth and overall well being

    But the budget woes in the US, in so many ways, are an entirely separate concern. Let’s say we simply confiscate $2 billion from each of the 400 richest Americans. That doesn’t cover even one year’s worth of obligations for Social Security and Medicare. (Total cost: About $1.1 trillion.)

    To close to gap, we have to do far more inconvenient things — like raising the retirement age, increasing the amount of income subject to Social Security taxes, maybe even reducing benefits.

    There’s a good moral argument for getting the rich to pay a greater share (and in reducing the complexity of the tax code, which would accomplish something close.) But the budget troubles here are so huge that this isn’t anywhere close to a full solution.

  20. A sign of a genius idea is that, although new, it seems obvious! I would love to see governments introduce this. Great material for opposition governments to demand (though when they get into power next, they may rue it!) … Although Ted makes a great point that, politicians being politicians, the headings/categorisations would be manipulated by the spin doctors to present the truth in its most favourable light. However … if a standardised format could be legislated, that might limit the spin. Ted’s point about the format being overly simplistic could perhaps be addressed by allowing people to drill down into the detail underlying each figure. For many though, simpler is better.

  21. C. A. Hurst says:

    Hi Dan,

    Way to stir things up! All of the comments are great, also.

    I think that this points to the much bigger issue of calling everybody in public office to accountability. As you mention, the budget troubles are huge, as are the issues of political responsibility and accountability. Ya gotta start somewhere!

  22. Really good stuff! I love it because it crosses political lines. My wife has been calling for something similar for years (as well as a regular Exec Summary approach to who adds riders / amendments to bills, etc.). This is a relatively simple solution to make the debate real and meaningful … as opposed to a shouting match about invisible (opaque) numbers. Going to share with folks I know in government positions at state and local level as I can. Really brilliant to share this and put this out there for many to think about and act on as they wish. Going to check out Third Way too. I admit my complete ignorance of the name at this point. Thanks!

  23. aza says:

    谢谢分享!
    文章写得很好。。。。

  24. Paul says:

    Trevor,
    wherever you’re from…here’s a bit about economic inequality in our country:
    “In all the discussion about tax breaks for the rich, two fairly simple facts are really all you need to know.

    Fact No. 1 is that only 3 percent of all the taxpayers in the United States pay more in income taxes than the other 97 percent combined. Fact No. 2 is that even if you taxed that 3 percent of our population at a rate of 100 percent of their income, you wouldn’t produce enough additional revenue to cover the deficits our federal government is now incurring each year.” http://www.worldmag.com/articles/17160

    The reason we are still the destination of choice for the world’s huddled masses is we are still incredibly generous, even if it flows through the ham-handed government. Socialism (likely your world) is an animal farm of the self-righteous and self-loathing.

  25. pfctdayelise says:

    This idea was put forward by the conservative party at Australia’s recent federal election, which they (eventually) lost. see e.g. http://www.theage.com.au/opinion/coalition-draws-a-long-bow-20100812-121io.html

    Michelle Grattan, a long-standing political commentator, called it a gimmick:

    On the opposition’s example, $1180 of this $20,000 is spent on defence. ”Mr John Citizen”, when he receives his receipt, might find that an interesting figure. But how does he know whether the amount is this high because of waste, or because the defence force is very extensively and usefully occupied?

  26. pfctdayelise says:

    I might add, there is an example here – http://www.scribd.com/doc/35812114/Coalition-Tax-Receipt-for-PAYE-Taxpayers – it looks like a legit mock-up, but I couldn’t find it on an official party website anywhere.

  27. Leah says:

    WHY aren’t we doing this??

    This is a brilliant idea….we certainly need to give the government a big Receipt of sorts with our tax returns, and they get to audit us…I think it should work both ways.

  28. Jane B says:

    Certainly this is too simplistic, but is a starting point. Looking at the figures, taking into account “spin” as Ted reminded us, our own personal biases, etc. makes for a more informed, knowledgeable electorate and great conversation.

  29. Scott says:

    Taking this helpful exercise a step further, real engagement with taxes, spending and priorities would come from eliminating AUTOMATIC payroll deductions.

    Whatever the tax amount, getting people to physically, consciously write-out a check to federal, state and local governments would certainly get people engaged in the conversation.

  30. Steve says:

    This is a great idea but I agree with those voicing cynicism that it would be a very politicized/spun set of nuumbers. I’m sure the fear is that it would foster all sorts of protests and ‘line item’ individual tax revolts of those not wanting to fund a war or a program, etc. I suppose the next step would lead to an ‘opt-in’ program ala United Way to let me decide where I want my tax dollars spent! And, suddenly, you’d have a whole new set of data points to be ignored by politicians. It’s definitely worth doing; I don’t read many packaged food labels but I am glad they are there.

  31. I’ve thought for years that they should put a “What would you want your taxes used for?” survey at the end of the tax form. It would be a list of the kind of items you see on the receipt above, and while it would hardly represent a policy referendum, wouldn’t it be fascinating to see?

  32. This apparently simple idea would produce chaos. Responsible, well-informed citizens could handle this information. Unfortunately there are a great number of irresponsible citizens who do not understand why government and government expenditures are necessary. The way to address the problem is by electing better legislators and leaders.

  33. Jane says:

    It’s a great idea – I’m thinking it wouldn’t be too difficult to integrate into tax prep software, so that when you get your final tax amount you also get the breakdown, using the categories and percentages published in the current budget.

    What I’d really like to get from the government is an email thanking us for being part of the workforce that keeps this country going and helps support the young, the old and the disabled; for paying taxes promptly; and for staying solvent so that we don’t burden other people with our money problems. And I’d like them to do that without political spin of any kind. Think it can be done?

  34. This is great! Not just for tax payers, but something like this would also be great to receive any time you give a donation to a nonprofit…

    Thanks for sharing!

  35. Well, start with the fact the Federal Reserve is not a government entity and has NEVER been audited so we don’t really know where our money goes. Then look at your average politician who is committed to bringing home as much bacon to his constituents as possible without alerting anyone but the constituents to that fact…corruption in general. The fact that 1/4 of our taxes, or more! goes into black ops that is never accounted for….I could go on….but basically? The whole system is corrupt and broken and a tax receipt – as nice as the concept is – wouldn’t fix it.

  36. Jessie BC says:

    I agree that this list could be easily politicized- already you can see some glaring omissions from this chart: For example, how much fell under other defense spending not related to combat missions, personnel or benefits- things like military technology, weapons, aircraft, ships, buildings, or anything else purchased through defense contractors? I imagine that’s a rather hefty sum.

    (And the total dollar amount accounted for here only adds up to about $3200ish, for someone who paid $5400 in taxes. There’s alot missing, here…)

    It’s also interesting that defense expenses were split into three different categories, which makes them appear lower on the list. That would be another way to politicize certain types of spending- split it into different categories.

    (A note for those criticizing how Education spending was listed- education dollars are alloted through the state, so most federal money comes through grants specifically earmarked for schools with special need. Readers would have to understand that the education spending listed in the federal “reciept” would not account for all education spending, since most of it comes through the state.)

    Nonetheless, I do think this is a great idea, even if it is one that would require setting some standards as to how expenses are listed, as well as some oversight from individuals with different views/agendas to hold those listing of the data accountable.

  37. Robert Weston says:

    Paul,
    I looked at the World article and all I see is a claim, I see no citation for source, whereas the articles I’ve seen about letting the Bush tax cuts expire all say that the cost of preserving the tax cuts for the top 3% would cost 700 billion dollars over 10 years, presumably 70 billion a year, and that this represents about an additional 10% of their income – so for 100% of their income would be well over a trillion dollars a year which sound to me like enough to cover the defiicit.
    On the other hand, Trevor’s point about Ariely’s graph suggests that most people would support increasing taxes the top 40% of earners to achieve a fair distribution of wealth, even among the top 40%. None of which says that we may not need to increase retirement ages, people are living longer after all, and go to a model where social security is more like catastrophic health insurance.

  38. Joe says:

    One reason not to do it – a classic sales technique to hide the total cost and not scare away the prospect is to reduce the expense to the ridiculous. “Own this new car for less than $5 per day” sounds better than “Buy this car for $30,000 by paying me $5 per day for the next 10 years”. $0.19 in salaries sounds small, and not worth fighting about. Add that together with tens of million other “$0.19-ers”, and all of a sudden, we’re talking real money.

  39. superb! love the concept! wonder when the ‘taxpayer receipt’ concept may be fruitful. It will inspire a larger society to question the government on its spending habits. for example, why give ‘foreign aid’ when the US has accumulated a huge national debt by itself? Let those countries earn for themselves!

  40. Dan Pink Dan Pink says:

    @Dr. Kink — Fair enough. But who’s going to elect those enlightened leaders?

  41. Daniil says:

    @Dan,

    Here is a site I found recently that gives pretty good details based on your annual income.

    http://www.whatwepayfor.com

  42. Intriguing idea–comments even moreso. My concern falls in the “real vs theorized” category. I’m guessing that it would be impossible to list actual dollars spent on any line item, and what we would get instead would be budget proposals, leaving a MAJOR loophole through which politicians could create any sort of scenario they wanted us to see. We’d be back where we are now: Blind.

    Still, an interesting idea that should be explored.

  43. JJ says:

    Another idea, end withholding and make citizens write a check each month or quarter to cover their prescribed share of taxes. I think you would see an immediate demand to reduce taxes and eliminate all waste.

  44. Cro says:

    HAH! I love all the ideas about confiscating up to 40% of the wealthiest citizens cash to re-distribute it to the less fortunate.

    I wonder, would they like me to be in charge of the distribution? Can I decide what constitutes wealth or income?

  45. Jennifer says:

    i love it.

    like a visa bill. what you spent this year.

    i think it would encourage people to vote.

    make apolitical people more active.

  46. Alex Sirota says:

    Dan,

    The core idea stems from the disconnection experienced by taxpayers between the money they PUT INTO government and the money THAT GOES OUT.

    There’s a reason for this — it’s because the systems and processes and accountability in government for money going in is MUCH MORE developed, automated and granular than money going out.

    Simply put, the process is highly asymmetrical. The core issues are that government has been modernizing the internals of revenue collection for decades, but is only NOW getting to the business of revenue disbursements. I am witnessing this first hand in Ontario.

    The act of dealing with stakeholders who receive government grants and the actual management in government itself is a process that mostly runs on the full Microsoft Office suite in most modern governments. The level of detail usually just monitors the actual “spend” but rarely monitors the net effect or outcome. Furthermore, the notion of performance measures that are consistent across a government or even in specific target areas (eg education) are not nearly complete or logical. Most money that is spent is reported back with arcane, hard to understand “key performance indicators.” Those are hard to manage because they are unstructured and usually inside information bases built with Access or Excel.

    To really effectively do this, a tax receipt is not what is required. What is required is a tax report card.

    Something that shows each citizen the effect their money had on moving the needle on each area of need. And that is much harder to do, because the raw performance data simply isn’t there in a ready to use form. Sure budgets are available, but the actuals — that’s where the real magic is, not in the budget.

    I am exploring various grant management systems to modernize government — one open source solution is projectfluxx.org — I’ve installed it and am playing with it. There are many others but they are all very v0.1 and there is much work to be done here.

  47. David Yorka says:

    I avoid the Why’s and I do enjoy your tax time take I don’t see myself getting to the whys’ in this life.

    This may help — give hope? Intelligent life…?

Leave a Reply